Equity retreat ‘fairly ordinary’ so far: NDR’s Clissold
A 7% pullback by the S&P 500 index SPX from its July 31 high has been relatively ordinary, but it’s been accompanied by a rout in the Treasury market that’s sent yields on 10-year notes BX:TMUBMUSD10Y and the 30-year bond BX:TMUBMUSD30Y to 16-year highs.
But the outlook is complicated by the Treasury market rout, with investors — unsurprisingly, given the scope of the fall — even more pessimistic toward fixed income, according to NDR’s proprietary indicators. Treasury bond futures TY00, +0.16% dropped around 17.5% from their April 6 high through midweek.
Blame it on inflation. Clissold, in a phone interview, noted that for much of the past quarter-century, stocks and bond prices moved opposite each other. Or, stocks tended to rise as Treasury yields rose. The stock-market selloff so far hasn’t been a “capitulation-type of event where the decline turns into a panic,” Clissold told MarketWatch. The retreat has been fairly “ordinary and broad-based” by historical standards, with the Cboe Volatility Index VIX rising but not hitting extremes and the S&P 500 not suffering a number of outsize down days.
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